M ay 2 0 1 6

F inancial A ccounting
A dv isory Serv ices

C onsolidation tool
Fo r an ef f ec tiv e
c o nso lidatio n pro c ess

Today’s CFOs are under pressure to report EY can provide financial and accounting
Consolidation can make the reporting
process more complicated and can accurately and quickly to management and advice and assistance on every aspect
introduce stringent time lines for many external stakeholders. Some businesses of the consolidation and reporting
organizations. face a dilemma when consolidating their process. Because financial processes
An effective and consistent reporting financial statements. A dedicated tool are interlinked with business processes
process requires a reliable database. is too complicated for the size of the throughout the organization, streamlining
This is often achieved by using dedicated organization and the use of spreadsheets reporting and consolidation helps to
consolidation and reporting software. This is not adequate. EY can help to develop an realize significant benefits in validating
software allows for an automated process, alternative process. data and providing a better audit trail.
a reliable audit trail and a protected
database. But it can be costly in terms of
time and resources.
Some smaller organizations may
consolidate using spreadsheets. However,
this requires significant manual intervention
and may lead to a poor audit trail.
Developing a consolidation tool using your
existing software application can be an
alternative for organizations that are unable
to invest in consolidation software.
 Spreadsheets are of limited use when undertaking a consolidation exercise.
F inding th e rig h t Their drawbacks include:
option f or you • Poor
► audit trail
• Inconsistency
► of data
• Insufficient
► data protection
• Significant
► error and control risks
• Insufficient
► follow-up of controls and complex formulas
• Low
► level of automation
• Manual
► validation and control of package data
• No
► ledgers and predefined statements

Dedicated consolidation software also brings some significant challenges:

• It could incur high implementation, license, maintenance and infrastructure costs.
• It can be oversized compared to the organization’s needs.
• Distribution zones are limited to some countries or areas.
• Users require training.
• It can easily become obsolete as technology advances.
EY can help you to develop a controlled consolidation process that means your
organization does not have to invest in a dedicated consolidation tool. No manual
intervention is required because the transmission of information is standardized and the
major calculations are automated. The structure allows reporting to be flexible. Changes
in group structure can be accommodated comfortably.

With the help of our consolidation team, we can help you to:
H ow can E Y ’s • Improve the quality of the reporting sent by local entities
process h elp?
• Improve the processes and links between financial requirements and reporting for
management purposes
• Be more confident in compliance for regional or subgroup-level consolidations
EY can help you to develop an alternative consolidation process.

I dentif y Desig n Deliv er Sustain

• Assist in the • Streamline chart of • Consolidate financial • Provide parallel

identification and accounts if required statements consolidation
analysis of the • Design input • Prepare assistance for one
group’s needs templates, database management more quarter
and output reports reports (MIS) • Support continuous
• Undertake a dry run improvement
to check the system (new needs, new
configuration structure, new
• Train users activities, etc.)

2 | Supporting C F Os as th ey rise to today‘ s business ch alleng es

 Our approach to establishing a consolidation process, following our assessment of the
Step 1 : A ssess needs and group’s needs, starts with streamlining the chart of accounts. The next stage is designing
streamline ch art of accounts the reporting package. From there, the data is processed in your existing database
management application and the customized output is generated.

Co nso lidatio n pro c ess

1 2

S treamline and map Desig n th e standardiz ed

th e c h art o f ac c o unts and c usto miz ed
repo rting pac k
O ur
appro ac h

P ro c ess data in Generate c usto miz ed

applic atio n o utput
3 4

EY helps you to input templates designed to collect information from the group’s entities.
Step 2 : C ollect and These templates are integrated into your software application, where the consolidation
v alidate data process can be launched. Once data has been incorporated, it is validated. In order to
verify results, a trial run is carried out on any prior-year data before the tool is sent live.

Desig n th e f o llo w ing standardiz ed input templates to c o llec t inf o rmatio n

f ro m g ro up entities in standardiz ed manner:

• Local GAAP and IFRS and US GAAP (balance sheet) compliant template
• Local GAAP and IFRS and US GAAP (income statements) compliant
template
Desig ning o f input • Intercompany elimination template
template
• Related party template
• Fixed assets schedule
• Others (customized as per clients needs), if any
• Confirm input template takes care of financial statements presentation
requirements, including schedules

ssi n uni ue codes to each line item o the financial statement in the trial
Co ding b alanc e and in th e standardiz ed template. ( T h is w o uld no t b e nec essary if
th e g ro up h as streamlined c h art o f ac c o unts w ith uniq ue GL c o des.)

M ap th e input templates w ith th e c o mpany’ s trial b alanc e b ased o n

M apping
uniq ue c o des.

T est th e c o nso lidatio n ex erc ise.

T esting

I nc o rpo rate data v alidatio n c h ec k s th at w ill th ro w erro rs at th e data

Data v alidatio n input sta e itsel and si nificantly impro e the uality o data in o
f ro m sub sidiary c o mpanies.

P erf o rm a c o nso lidatio n ex erc ise f o r any partic ular prio r year to v erif y
T rial run results are ac c urate.

Supporting C F Os as th ey rise to today‘ s business ch alleng es | 3

 From a series of input templates provided by the group’s subsidiaries, your application
Steps 3 and 4 : P rocess data generates publishable consolidated financial statements.
and g enerate output — ex ample
Subsidiary company’s Databases Output reports
of structure input templates

A Ltd. input template

Financial statements database Consolidated financial
B Ltd. input template statements
C Ltd. input template Subsidiary financial
D Ltd. input template statements

E Ltd. input template Intercompany database Intercompany matrix

F Ltd. input template Fixed assets database Fixed assets schedule

G Ltd. input template Related party template Related party schedule

• It allows controlled consolidation without the cost of a dedicated tool.

Benefits of EY’s • The automated process saves your team time.
consolidation process
• It provides reliable and consistent reporting.
• There is improved quality and accuracy of reporting.

Our cross-border, multidisciplinary teams can provide you with an alternative to

W h yE Y spreadsheets or an expensive consolidation system.
We will work with you and your team to understand your business. We will share
our methodologies to help your organization select the right consolidation system
and processes.

C ontacts:
P ank aj C h adh a Susanne J ä g er
pankaj.chadha@in.ey.com susanne.jaeger@de.ey.com
+ 91 124 464 4150 + 49 6196 996 28607

Certain of our services for an audit client and its affiliates may be more limited in order to
comply with applicable independence standards. Please reach out to your EY contact for
further information.

EY | Assurance | Tax | Transactions | Advisory

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